In 56 percent of corporate legal departments (CLDs), including banks and other financial services firms, the top 10 biggest legal matters account for between 20 percent to 40 percent of spend. But according to Wolters Kluwer ELM Solutions, which published its third LegalVIEW Insights reports today, there are still a variety of simple cost-saving tech enabled measures a department can implement in order to reduce the budgetary impact of these matters over the long-term.

Insights into CLD spend are sourced from ELM Solutions’ LegalVIEW database which recently crossed the $150 billion threshold. The wide scope of that data bolsters ELM Solutions’ ability to continue identifying key trends - and provide expert guidance - within an ever-changing legal industry.

Megamatters, or legal matters that accrue more than $1 million USD in lifetime costs, account for much of the volatility found in corporate law firm spend. However, the ELM Solutions report indicates that some organizations are still not taking full advantage of technology and managed services that can help reduce spend. For example, the use of alternative legal service providers (ALSPs) can drive significant improvements in cost control. But the most recent LegalVIEW Insights report showed that ALSPs have still captured only a small percentage of megamatters overall, fielding just 2.2 percent of the available megamatter work coming out of CLDs.

“There is always low-hanging fruit in every type of legal matter, and the scope of these matters means that the simple effort of picking the low-hanging fruit from a single matter could save millions,” said Nathan Cemenska, Director of Legal Operations and Industry Insights for Wolters Kluwer ELM Solutions.

Additional highlights from the third LegalVIEW Insights report include:

• Megamatters are bellwethers for the trajectory of a department’s overall legal spend. If annual megamatter spend rises or falls by even $1 USD, there is an 89 percent chance that the direction of total outside counsel spend will follow accordingly. The connection between megamatter and total outside counsel spend necessitates ongoing communication between all stakeholders.
• Legal departments may find that the number of megamatters on their docket can vary widely over even a six-year period. During a “high” year, megamatters as a percentage of overall outside counsel spend will be at least double what they were during a “low” year inside 38 percent of corporate legal departments. Some CLDs have previously used “low-touch” tactics such as creating matter-specific discounted rates for megamatters and enforcing outside counsel billing guidelines to manage the resulting costs.

• CLDs that refuse to engage regional law firms on megamatters could be forfeiting significant cost savings in the form of reduced hourly rates. Unranked law firms outside of the Am Law 200, for instance, appear to be playing a central role in how some corporate legal departments are handling their megamatters. Together, unranked firms account for about 28 percent of megamatter spend, which remains less than the 40.3 percent of spend they capture in matters accruing less than $1 million USD in lifetime costs.

ELM Solutions, part of Wolters Kluwer’s Governance, Risk & Compliance division, is the market-leading global provider of enterprise legal spend and matter management, contract lifecycle management and legal analytics solutions. The company provides a comprehensive suite of tools that address the growing needs of corporate legal operations departments to increase operational efficiency and reduce costs. Corporate legal and insurance claims departments trust its innovative technology and end-to-end customer experience to drive world-class business outcomes. It counts some of the world’s largest financial institutions among its clients.

Last month ELM Solutions announced the winners of its fifth annual Legal Innovator Awards at its virtual premier user conference ELM Amplify 2021. The awards are designed to celebrate clients who have transformed legal operations. Citi, the leading global bank, was recognized for its continued efforts to enhance its Legal data quality and controls, productivity and spend management, and reduce technology risks. After a strategic review of its organization, processes, systems and controls, Citi was able to make significant progress on key priorities like the centralization and optimization of internal and external spend, risk-based management of its law firm network and enhancing its third and fourth party information security controls by moving to the centralized ELM Solutions’ Passport platform.

Equitable, a leading financial services organization, won its accolade for developing a modernization strategy and technology roadmap which has resulted in significant operational improvements in its law department. Judges noted how Equitable has shown itself to be a forward thinking and cutting-edge partner, looking to explore and utilize new processes and functionality with a keen eye on the possibility of developing new processes or features.

Swiss Re, one of the world's leading providers of reinsurance, was also recognized as an ELM Solutions Legal Innovator Award winner. The accolade acknowledges the company’s strategy around operational excellence and for using Artifical Intelligence to assist with invoice review in capturing anomalies and billing pattern changes that would not be realized in a standard eBilling platform.